Albanese challenges for the ALP's leadership

THE man who once famously said he "liked fighting Tories" has entered the race to become the Australian Labor Party's next leader.

Outgoing deputy prime minister Anthony Albanese will go head-to-head with Bill Shorten for the leadership after informing the Labor caucus of his decision on Friday.

It means that for the first time rank and file party members will join the caucus in deciding the leader - a result of changes put forward by former PM Kevin Rudd.

The pair will spend the next month putting their respective cases for the job, just as they did before the caucus on Friday, with the rank-and-file ballot to take place before the caucus votes.

Labor MPs and Senators will not know the results of the membership ballot before casting their own votes.

Outgoing treasurer Chris Bowen will be the party's interim leader while the process plays out.

Mr Bowen revealed the outgoing executive would fill the shadow portfolios during that time, including the leadership candidates, with Richard Marles stepping into defence.

A calm and confident Mr Albanese fronted the media in Canberra to outline his credentials for the leadership.

Mr Albanese, who was a highly effective Leader of the House, spoke about his diverse policy experience gleaned from six years as a senior minister in the Rudd and Gillard governments.

"I firmly believe that I'm the best candidate to lead Labor back into government at the next election," Mr Albanese said.

"I think I'm up to a hard job."

Mr Albanese said the Labor Party "had to change" for the sake of the country and the party.

He stressed the need for a focus on four key themes: a strong economy; investing in opportunities through education, business and workplace reforms; a sustainable Australia through action on climate change, and a fair go for all.

"I have a record of taking on these issues. What you see is what you get. I am someone who puts forward a view strongly and passionately when I believe it," he said.

And in a sign that the next four weeks will be more about policy than personality, Mr Albanese spoke glowingly about Mr Shorten, who announced his intentions earlier in the week.

He revealed Mr Shorten was the first person he told about his decision to contest the leadership.

"Bill is a friend of mine. He would make a very good leader. He's a great communicator," he said.

Mr Shorten also fronted the media on Friday and, like his opponent, vowed to accept the decision of the caucus and ALP members.

He praised Mr Albanese, describing him as "very good candidate", and promised the contest would be a "civil debate".

Details about the leadership race - including the timing and format of any public debates, eligibility criteria for voting and what would happen in the event of a tie - were yet to be determined.